Recording Payroll Pt.4

Sunil is issuing Sara's paycheck. The pay stub shows a net pay of $1,573.61. The following deductions were made: • FICA Medicare: $6.08 • FICA Social Security: $23.87 • Federal Income Tax: • State Income Tax: $35.42 • Medical insurance: $72.01 Close × What was Sara's gross pay?

$1,729.53

Darnell's paycheck is for $2,480.84. You log the following employer expenses: • FUTA payable: $81.54 • SUTA payable: $180.32 What is Darnell's net pay?

$2,480.84

Fill in the blank: As a bookkeeper, you ___________ guide employees when filling out their tax income forms.

Cannot

When calculating net pay, all of the following are examples of employee deductions except:

FUTA

Carter's business has hired seasonal help for holiday events during their busiest time of the year. He's set up the first pay period to run from November 23rd to December 6th, with biweekly pay. This means, their first paycheck won't be deposited until December. How would carter record the wage expense for this pay period in his books if he is using accrual accounting?

He would have to calculate how much of the wages were earned in November to record at the end of the month and do a similar calculation for December's wages.

Marvin and Jax both worked 50 hours last week. Marvin is exempt and Jax is non-exempt. What will be different about their pay checks?

Marvin will not receive overtime pay, but Jax will.

Aruna is a partner in her sister Yasmine's business, a traditional Indian cuisine restaurant. They have decided to make sure they are equally invested and share the day-to-day running of the restaurant. They have also decided not to pay themselves by guaranteed payments, but will instead use a different option. Which of the following is the other option available to them as business partners?

Pay themselves by Draw.

When it comes to payroll, which of the following is true about cash basis accounting?

You will log your payroll payments at the same time wages are provided to employees.

How will this be recorded in the FICA payable account?

as a credit

Jose is expanding his painting business and wants to hire additional contractors to help out. He knows they are not considered employees but are independent contractors. As independent contractors, which of the following are true?

- He will use a form W-9 for hiring instead of a W-4. - The independent contractors will be responsible for withholding their own taxes.

Payments that are recorded on the balance sheet are:

. Draws • Distributions • Dividends

There are four main ways an owner of a business can get paid.

1. The first method is a draw. This is when an owner takes funds from their business holdings for individual use. 2. Next is a guaranteed payment, which you'll see in partnership or LLC agreements. Guaranteed payments must be reasonable compensation for the role of the partner and are typically not subject to tax withholdings. 3. Salaried payments are found in LLC, C Corporations, S Corporations, and non profit businesses. This means the owner is designated as a staff employee and receives a "reasonable" salary. 4. The final way is through distributions or dividends. Distributions are seen in S Corporations and dividends are seen in C Corporations. This refers to receiving a percentage of a business' profits.

What government form do businesses use quarterly to pay Social Security and Medicare tax and report payroll information on salaries, wages, tips, and taxes?

941